Your interpretation of the quote is that middle managers don't provide value, but I think that may be too broad. I understood it as "highly formalized process often rewards middle managers", which I do think is true.

The best manager I was lucky enough to report to personalized his approach to his direct reports. He recognized that some people are more creative, others prefer more structure, etc. He still had his responsibilities, e.g. report progress on project X and estimate completion, but this was abstracted away from the team. For all we knew, we each had an area of the system we were responsible for, and we had longer-term collaborative projects that would take on the order of months. I didn't realize how great of a manager he was until I had other managers who firmly believed in the One True Way™ of managing projects, and also pretty much required everyone to be heavily involved in it. (Give estimations for things you haven't worked on, and move tasks as you get to each stage of development.)

Getting back to my original point - highly formalized process often rewards middle managers because it simplifies work for them. Everything is already tracked in the system, it's a matter of moving around and allocating resources. But why does everyone need to be involved in this? Why isn't heavily formalized process compartmentalized to just managers and the people they report to (and maybe their reports that enjoy that process)?

I recognize the value that managers bring - otherwise every individual contributor becomes a mini-PM - but I also believe that the best managers put in the work. They build good personalized relationships with each member of the team, and are able to compile estimates based on their interactions. It's not always a cold science in the vein of "since Alice has 13 points out of a maximum of 18 points per sprint, I should try to allocate 5 more points - the biggest task that fits into that is 4 points, so let's assign that to her."